Item 5 - Fees and Compensation
The extent to and specific manner in which our clients are responsible for fees,
performance-based compensation and/or expenses are set forth in each client’s applicable
written agreement with us and, in the case of the private investment funds that we manage,
in the offering documents for such Funds.
We generally deduct our management fees from the Funds either monthly or quarterly in
advance. Generally, we receive performance-based fees or allocations from the Funds
Anabranch Capital Management, LP Form ADV: Part 2A Page 4
either on an annual basis in arrears or upon the distribution of capital. We also may receive
performance-based fees or allocations on a withdrawal/redemption by a Fund investor.
Performance-based fees or allocations are typically subject to “hurdles,” “high-water
marks” and/or “clawbacks,” in each case as described in the offering documents for the
Funds.
Clients that are private investment funds generally bear all costs and expenses associated
with their operations. Thus, the Funds will generally bear, or reimburse the Adviser and/or
the General Partner for advancing, their own expenses, including, without limitation, the
following: (i) expenses related to the research, execution and monitoring of actual and
prospective investments (whether or not consummated) and the consummation of
investments, including, without limitation, the following: third-party investment sourcing
fees; consulting fees; expert fees; fees and expenses of and related to obtaining research,
analytics and market data (including, without limitation, third-party data sources and any
information technology hardware, software and data subscriptions (such as Bloomberg and
FactSet) or other technology incorporated into the cost of obtaining such research and
market data); due diligence expenses including, without limitation, consulting and
appraisal fees; investment- and research-related travel expenses (consistent with the
Adviser’s travel policy); any outsourced trading provider fees; brokerage and prime
brokerage fees, commissions and expenses (including the costs of negotiating,
documenting and/or amending agreements with prime brokers, ISDAs and other
agreements with trading and financing counterparties); expenses relating to borrowing
securities to be sold short; clearing and settlement charges; custodial fees and expenses;
bank service fees; interest expenses and other borrowing costs; fees and expenses of proxy
research and voting services; broken deal expenses; fees and expenses of third-party
professionals, including, without limitation, consultants, investment bankers, attorneys,
accountants and service providers who, in each case, provide services to the Funds or
provide services to the Adviser, the General Partner or their principals (on matters that
would not have arisen but for their respective advisory relationships with the Funds); and
expenses relating to engagement with a company irrespective of the outcome of such
engagement, such as shareholder and management communication, soliciting proxies,
hiring proxy advisory consultants, hosting shareholder forums, hiring public relations
consultants and proposing or nominating directors or executives, including sourcing,
recruiting, standby and indemnification and other expenses, regardless of whether the
nomination is successful; (ii) organizational fees and expenses and fees and expenses
incurred in connection with the offering and sale of interests in the Funds, including,
without limitation, the following: the preparation and amendment of the offering and
subscription documents of the Funds; and fees and expenses of the Adviser incurred in
connection with “world sky” matters and private placement regimes, including the
European Alternative Investment Fund Managers Directive, and Form D and blue sky and
similar fees and expenses; (iii) operational expenses, including, without limitation, the
following: fees and expenses relating to information technology hardware, software or
other technology (including, without limitation, costs of software licensing,
implementation, data management and recovery services and custom development) used
to research investments, evaluate and manage risk, facilitate valuations, facilitate
accounting functions, facilitate compliance with the rules of any self-regulatory
organization or applicable law (including, without limitation, reporting obligations) in
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connection with the activities of the Funds, and facilitate and manage the order execution
of securities or otherwise manage the Funds (such as portfolio management systems and
order management systems); fees and expenses of third-party risk management products,
models and services; third-party administrative fees and expenses, including fees and
expenses of the Funds’ administrator and any middle and/or back office service provider;
fees and expenses of third-party professionals, including, without limitation, consultants,
valuation service providers, attorneys, accountants and tax preparers; third-party audit and
tax preparation expenses; insurance expenses, including, without limitation, premiums for
cybersecurity insurance and liability insurance (including directors and officers liability
insurance and errors and omission insurance) covering the Funds, the General Partner, the
Adviser and the principals, officers, employees, managers, partners, members, affiliates or
agents of any of the foregoing, and the directors of the Funds (in each case, even if such
insurance covers conduct for which indemnity would not be available from the Funds);
fees and expenses associated with Fund director meetings and meetings of Fund investors
as a whole, including, without limitation, expenses related to the organization and conduct
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